West Ham have around three months to improve the terms of their deal to move into the Olympic Stadium or the mayor of London, Boris Johnson, will pursue a "plan B" without football. The East End club remain confident that any remaining issues can be ironed out and on Wednesday took another step towards relocating to Stratford after they were named the highest-ranked bidder for the £429m venue.

Now that West Ham have been named as the preferred option for the 99-year lease, with bids from Leyton Orient and a consortium pursuing an unlikely plan to hold Formula One races in the Olympic Park rejected, several months of intense negotiation lie ahead over the terms of the deal. The London Legacy Development Corporation is keen to come to a decision by March – by which time the organisers of the 2015 Rugby World Cup need to know if they will be able to use the stadium.

If a deal is agreed with West Ham, the logistics of the construction work mean it will be virtually impossible to host Rugby World Cup matches at the stadium in the autumn of 2015. The club is unlikely to move in until the start of the 2016-17 season, more than four years after the Olympic opening ceremony.

Construction work is unlikely to begin until autumn next year and there will be events held in the stadium next summer before it does.

The LLDC will now press ahead with plans to appoint a stadium operator. The LLDC wants West Ham to improve on their £15m contribution to the £160m-plus conversion budget required to install retractable seats and a full roof. But, as revealed by the Guardian this week, there is also a wider desire to ensure that the public purse shares in any upside for West Ham from moving to the well-connected, 60,000 capacity stadium.

That is likely to include negotiations around guaranteeing some upside for the LLDC if David Gold and David Sullivan, who own 65% of the club, later sell it on at a profit. There are fears that the government could be embarrassed if the club is "flipped" and sold on to a new owner at a huge profit. It is understood that West Ham will underline the long term commitment of their owners and remain open to negotiations over how they could provide comfort on that point.

Johnson said he was "very pleased" with the agreement but added that a future without football remained viable if a final deal could not be concluded with West Ham. "If we can't do a deal that protects taxpayer value, that protects the £9.3bn of Olympic investment and the £500m spent building the stadium alone, that's fine and we'll go on and the stadium will have a fantastic future in any event," said the mayor.

He insisted that "plan B" – reopening the stadium more rapidly and cheaply as a venue for concerts and one off sporting events without the involvement of West Ham – remained viable. West Ham believe that not only do they offer the most viable economic solution to the long running conundrum over what to do with the stadium, but that their presence will give the park a vitality and legacy benefits that it would otherwise lack.

West Ham's vice-chair, Karren Brady, said: "For the last three years it has been my firm, unwavering belief that the stadium can truly become a multi-use destination of which east London and the nation as a whole can be proud."

Leyton Orient's rival proposal was rejected "due to issues relating to commercial viability" and an unlikely scheme to host Formula One races in the Queen Elizabeth Olympic Park was dismissed "due to too much uncertainty in relation to key aspects of their bid and assumptions in their business plan". Orient chairman Barry Hearn, who has been a vocal critic of the process and remains concerned about the effect of West Ham moving closer to Brisbane Road, said he would continue to examine his options.